Rising Food Prices Push 44 Million Globally Into Poverty

A 29% spike in food prices in the past year has pushed 44 million people around the globe into poverty, and threatens to start a serious crisis world-wide, according to the World Bank. This news was released just prior to the start of a G-20 Finance Ministers meeting, and underscored the need for action on this area. Why is this so important? World Bank President Robert Zoellick explains:

"The Bank?s Food Price Index shows food prices are now 29 percent higher than they were a year ago and only three percent below the peak of the last food crisis in June 2008," he said in opening remarks in a media conference call.

"Clearly, this is serious cause for concern."

The bank highlighted that food inflation swelled the ranks living in extreme poverty, which it defines as under $1.25 a day per person. This results in people having less to eat, and rising malnutrition, according to the report.

"This year is shaping up to be a very tough year for the chronically malnourished," Zoellick said.

"We know high and volatile food prices are a potent force," he warned, citing food riots in 2008.

"While not the primary cause for the political instability we see today in the Middle East, rising prices have nevertheless been an aggravating factor that could become more serious."

Now, this means there is political unrest coming out of this, something that we don't want, on the whole. Secondly, these people are falling below $1.25 a day. I can drive a quarter mile and spend that much on a bottle of soda.

Now, the "why's" on this. Why is this problem hitting the third world so hard, but not much here? Well, here our prices are mostly stable, thanks to a developed economy and consumer class, subsidies, and our strong agricultural base here to feed us. Our prices often times fluctuate based on packaging. The rest of the world is very susceptible to "futures" trading on food. Often times to lock in price, speculators in the market will sign contracts to buy agricultural products, to avoid being left open to variables in the agricultural market (bad crops, harsh storm seasons, labor shortages, etc). This basically builds in price increases, regardless of what happens. Foreign food markets also lack the certainty of consumers being able to afford it, and other issues we don't have here. Of course, don't mistake ourselves, our food prices aren't getting cheaper either. This is a really serious issue, and 44 million people around the globe are suffering as a result. The G-20 Finance Ministers must begin to take action now.